Offshore Property Ownership South Africa
Historically the income tax system in South Africa was source-based and apart from a few exceptions, residency was not a criterion. However, from the 1998 year of assessment South African residents became taxable on certain of their worldwide income starting with income received or accrued from foreign investments on or after 1 July 1997.
With effect from years of assessment commencing on or after 1 January 2001, South Africa completed the move from a source-based system of taxation to a residence based tax system in respect of all income, subject to certain exemptions. The effect is that all residents are now taxed on their worldwide income and no longer just on income from a source within or deemed to be within South Africa.
South African Tax Obligations – Non-Tax Residents
South African non-tax residents are not required to disclose ownership, income and gains in relation to foreign immovable property, but ceasing South African tax residency does not remove South African tax liabilities on South African immovable property.
All persons who are not residents (non-residents) are still subject to tax in South Africa on their income from a source within or deemed to be within South Africa. Any rental income received by or accrued to a non-resident from immovable property in South Africa is subject to standard tax in South Africa, although allowable expenses may be deductible subject to conditions.
Non-residents may also be liable to pay capital gains tax (CGT) on the taxable capital gain made on the disposal of the following assets:
- Immovable property situated in South Africa, such as land and buildings.
- Any right or interest in immovable property in South Africa, such as a long-term lease.
- Shares in a company where 80% or more of the market value of its net assets comprises immovable property in South Africa, and the non-resident holds directly or indirectly 20% or more of the shares in the company.
- Assets of a permanent establishment, such as a branch of a foreign company, situated in South Africa.
A non-resident does not need to register separately for CGT if that person is already registered for income tax. However, if a non-resident is a natural person, who is not registered for income tax purposes because they are not receiving any income from a source in South Africa or a source deemed to be within South Africa, and an asset is disposed of in South Africa resulting in a capital gain or a capital loss exceeding ZAR20,000, then the non-resident will have to register as a taxpayer and submit an income tax return.
A capital gain in respect of the disposal of an asset during a year of assessment is equal to the amount by which the proceeds received or accrued in respect of the disposal exceed the base cost of that asset.
A capital loss in respect of the disposal of an asset during a year of assessment is equal to the amount by which the base cost of that asset exceeds the proceeds received or accrued in respect of that disposal.
South African Tax Obligations – Tax Residents
South African tax residents with offshore property interests are required to disclose ownership, income and gains in respect of foreign immovable property to the South African Revenue Service (SARS) in line with exchange-control, income tax and capital gains tax requirements.
Previously enforcement in respect of foreign immovable property relied primarily on voluntary disclosure, but the expanded availability of third-party data to SARS has made non-compliance an increasing risk.
South Africa was one of 26 countries to sign the OECD’s Multilateral Competent Authority Agreement on the Exchange of Readily Available Information on Immovable Property (IPI MCAA) in December 2025, which creates a new international framework for the automatic exchange of information on overseas real estate.
The IPI MCAA is intended to close a gap in cross-border tax reporting by ensuring that tax administrations have access to “readily available” real estate information, including ownership details, property value, transaction history and rental income.
The other initial signatories included Belgium, Brazil, Chile, Costa Rica, Finland, France, Germany, Gibraltar, Greece, Iceland, Ireland, Indonesia, Italy, South Korea, Lithuania, Malta, New Zealand, Norway, Peru, Portugal, Romania, Slovenia, Spain, Sweden and the UK.
First exchanges are scheduled to start in 2029. SARS will receive a once-off transmission of historical foreign property holdings where records exist, which is expected to include acquisition dates, purchase prices, property characteristics and, in some cases, current valuations. Annual automatic reporting will then apply to all new foreign property acquisitions by South African tax residents.
A second reporting mechanism covers income and disposals. SARS will receive annual data on rental income generated from foreign properties, as well as information relating to sales and capital gains. This reporting will identify beneficial owners even where properties are held through companies, trusts, partnerships or nominee arrangements.
South African tax residents with offshore property interests should review all direct and indirect holdings, assess whether acquisition funding was fully declared and compliant, ensure that foreign rental income has been reported correctly and confirm that foreign assets are accurately detailed on tax returns.
If there are omissions, professional advice should be sought, and voluntary disclosure undertaken. South Africans who have purchased property abroad and do not intend to return to South Africa, should also consider ceasing their tax residency before automatic global property reporting goes live.
Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
